Citi Research Reevaluates Bristol-Myers, Lowers Price Target

Expectations are for an “underwhelming subgroup analysis” when the CheckMate-026 trial is presented at the forthcoming ESMO conference, Citi’s Andrew Baum said in a report. He maintained a Buy rating on Bristol-Myers Squibb Co BMY, while reducing the price target from $75 to $70.

Citi’s companion report named ‘Divining the Future Post CHECKMATE-026’ highlights multiple possibilities for IO market share capture in the large NSCLC lung cancer segment. The report also highlights low expectations for the CheckMate-026 PD-L1 subgroup analysis at ESMO, which is scheduled from October 7 to October 11, analyst Baum mentioned.

Market Share

Baum noted that the base case forecasts assumed that even if PDx/CTL4 combination data is compelling, Merck & Co., Inc. MRK would retain at least 50 percent of “the disproportionately valuable high expressor market given its anticipated superlative efficacy, low toxicity and financial expense.”

The PDx/CTL4 of Bristol-Myers and AstraZeneca plc (ADR) AZN is assumed to equally share half of the NSCLC market in mid-stratum PD-L1 expressors. The smaller $700 million market, comprising of about 25 percent of patients with low PD-L1 expressing tumors, is assumed to be shared by Merck, Roche Holding Ltd. RHHBY, Pfizer Inc. PFE and Bristol-Myers, the analyst added.

Why Buy BMY?

“Despite the earnings downgrades and the cautionary comments over near-term news flow, we continue to view BMY as undervalued on the premise that BMY’s Opdivo and Yervoy combination together with AZN durva/ tremi combination will become the gold standard first line therapy for NSCLC in the significantly majority of patients,” Baum commented.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!